While I love what the Terrain achieves, I am concerned about using it with mobile apps. It seems to cut the performance (of everything) so severely that it really in not suitable for mobile apps at all. If this is the case, then perhaps the documentation should note this with a big WARNING! Do not use Terrains for mobile app development! Or perhaps I am simply missing some trick that makes it work? I tried reducing the size, limiting the amount of grass, etc. Please take a look at the following screenshots and let me know if there is any hope. Also, are frame rates of 6 normal for mobile? I am using an iPhone 4 for development.
iOS 1: without Terrain
iOS 2: with Terrain